Drivers

Controlling Business Costs, Part 3: Healthcare

Healthcare costs are an ongoing concern, with skyrocketing insurance costs and the new complex world of healthcare reform.

Healthier employees can help control the employer portion of healthcare costs. Since hiring only 100% healthy employees isn't a feasible option, many companies are looking at the benefits of an onsite medical care facility to help improve the health of their employees.

HNI, a non-traditional insurance and advisory firm, wrote a white paper entitled, Is Onsite Medical Care a Fit For Your Company?

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The white paper states that onsite clinics not only have the potential to contain medical costs, but they can also boost productivity by helping employees manage chronic conditions such as high blood pressure and diabetes.

"Large, self-insured employers have the greatest potential to reap savings from this strategy," notes the white paper. "Fully insured employers will not be able to realize direct cost savings, but may gradually decrease the cost of their benefits as their population’s health improves and experience gains in employee productivity as the result of the onsite clinic."

Controlling Obamacare Costs

Many aspects of the Affordable Care Act, known as Obamacare, are still under discussion for possible delay or even repeal. However, Kim Beck of insurance broker Cottingham & Butler, offers a few possible strategies to keep down additional costs the law could mean for employers:

1. Use participation in wellness programs and/or results of biometric screenings to reward healthier employees with lower premiums or more attractive benefits. The ACA allows this if certain guidelines are followed.

Some companies, Beck says, are taking this to an extreme. "We have employers saying, 'We're going to make the standard rate really high, and the incentive rate really low. We want unhealthy people to go to the exchange and we don't even care if we get penalized for it because it's cheaper than having them on our healthcare program.'"

2. Use a "defined contribution model." Here the employer pays a set amount toward the employee's health insurance, say $300 a month, then allows employees to "buy up" to a better plan using a choice of multiple plan design options. Walgreens is one company that has gone this way. It will allocate a fixed dollar amount for employees to use toward their choice of 25 health insurance plans offered through a private health exchange.

3. Don't offer coverage for spouses. The law only requires covering children (starting in 2015). UPS made news in August when said it will discontinue coverage for all working spouses who are eligible for insurance with their own employer. Although it blamed Obamacare costs, Beck noted that even before ACA, there already were many companies who do not offer coverage for spouses if they can be covered by their own employer's plan. In the trucking industry, she said, it's fairly common.

Since spouses will now have the option to go to the exchanges for coverage, companies could drop offering coverage for spouses at all. This actually could benefit the spouse if the spousal coverage your company offers is full price, not subsidized.

4. Offer "tiered" benefits. This could mean more expensive premiums for families with more children, for instance, or different coverage for different locations or divisions. Or coverage could be less comprehensive during the first year of employment, giving drivers extra incentive to stick around past that first high-turnover year.

There are other strategies, including "skinny plans" that exclude or severely limit coverage for catastrophic and expensive services but still meets the minimum value rule. These "skinny plans" have a lot of buzz in the marketplace, she said, but these and some other strategies may save money up front but will hamper companies in recruiting and retaining employees.